April 16, 2018

By a vote of 300-104, the U.S. House of Representatives voted to pass the Volcker Rule Regulatory Harmonization Act (H.R. 4790). The bill would grant exclusive rulemaking authority under the Volcker Rule to the Federal Reserve Board and would exclude banks under certain asset thresholds from the Rule.

Exclusive authority for the Fed. The Volcker Rule was added to the Bank Holding Company Act of 1956 by Section 619 of the Dodd-Frank Act. It places certain limits on financial institutions' proprietary trading and relationships with hedge funds and private equity firms. Currently, the federal banking and market regulatory agencies share rulemaking authority under the rule (the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Securities and Exchange Commission, and Commodity Futures Trading Commission). Upon enactment, the Federal Reserve Board would have exclusive authority to issue and amend rules under Section 13(b) of the Bank Holding Company Act of 1956.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said that having five different regulators interpreting and enforcing the rule can create conflicts and confusion for regulated entities. However, Democrats argued that the exemption to the Volcker Rule "makes it easier for the Trump Administration to pursue a full repeal, and could once again put taxpayers on the hook if Wall Street is left unchecked," said Minority Leader Nancy Pelosi (D-Calif).